Sharma was arrested by the ACB on September 30 for allegedly accepting a bribe of Rs 29.5 lakh from Welspun when he was the collector of Kutch in 2004.

According to the ACB, the former IAS officer alloted a piece of land to the company at a price which was 25 percent of the prevailing rate, causing a loss of Rs 1.2 crore to the exchequer.

In return, the Welspun Group allegedly made Sharma's wife a 30 percent partner in Value Packaging, one of its subsidiaries. Later she received Rs 29.5 lakh as a profit share, the ACB said.

"Milak was then the managing partner of Value Packaging. Later he bought the company. He was arrested by ACB last night for his active role in facilitating the whole deal," said ACB joint director Shamsher Singh.

"Recently we found that signatures of Sharma's wife on partnership deed and bank documents do not match with her original signature. We suspect these signature were forged. We suspect that the money finally reached Sharma's account using such forged documents. To find out more, we have arrested Milak yesterday," said Singh.

Sharma, who faces five corruption cases, had filed a petition in the Supreme Court alleging he was being victimised by the Gujarat government, and CBI should probe these cases. However, last month the Supreme Court rejected his plea.